According to Giving USA 2008, The Annual Report on Philanthropy, 65-70% of U.S. households currently give to a charity, with nearly $300 billion contributed annually. Approximately ¾ of all such charitable donations are given by individuals and families.
We all have a degree of charitable inclination within, and many of us possess the desire to support a cause that has touched our lives along the journey. To maximize the ability to do so, we must think about our charitable aspirations within the broader context of our financial life, as well as the impact our gifts can make when given prudently.
Source: myphilanthropedia.com
Charitable giving is not an afterthought
At Sensenig Capital we believe that people do not have financial goals; they have life goals with financial implications. Our firm approaches wealth management in a holistic fashion. We urge clients who are charitably inclined, or those who want to be more so, to make charitable giving an active piece of their total financial picture, not just an afterthought. For example, a colleague recently told a story about a friend who had passed away. This person had dedicated the latter part of her life to serving a local charity, with the goal of passing her remaining assets to this cause upon her death. Unfortunately, her wishes were never met because of a failure to plan for this in her estate. Thinking about giving in the same way one thinks about planning for retirement or saving for college—and then acting accordingly—helps ensure that these goals are fulfilled exactly as intended.
Maximizing the charitable impact
If you have already given consideration to your charitable goals, then you are one step ahead. However, knowing you want to give and actually participating in the act of giving are two entirely different things. Many of us struggle to identify the best avenue for giving in conjunction with our own unique goals and circumstances. You should therefore identify the best avenues for giving in relation to your personal circumstance. Professional advisors can be of great help in building a charitable giving strategy, and we ask that you consider the following as food for thought.
Certain tax-efficient methods of giving create contributions greater in value than one might realize. For example, as an alternative to a cash gift consider making the organization a beneficiary of your IRA or donate in the form of appreciated assets. Many qualified charities also have charitable gift annuity programs whereby the donor can obtain an additional source of income. These methods all provide potential tax savings. Moreover, they will help you to be a good steward of your wealth, magnify your generosity, and secure your legacy within an organization you know and respect.
In conclusion, as you thoughtfully consider your legacy be sure to integrate your passion for giving into the broader context of your financial life. Think holistically and make generosity an active part of your strategy, not merely an afterthought. Use the avenues available to you as a means to maximize the impact your gifts can make in a way that works best for you.
